• The interest rate for the most popular U.S. home loan jumped last week to 6.73%, its highest since July, adding to headwinds for the housing market, even as the Federal Reserve looks set to further lower its target for short-term borrowing costs.
• The main home-loan rate is now 60 basis points above where it was immediately after the Fed's mid-September meeting, when the central bank made an initial half percentage point cut to the policy interest rate and signaled more reductions to come.
• Mortgage rates had been falling in anticipation of the Fed's move, pumping new life into the housing market. Contracts to buy previously owned homes jumped by the most in four years in September, the National Association of Realtors reported on Wednesday. Pending sales turn into actual sales a month or two later.
• Almost immediately after the Fed's September meeting, home loan rates began climbing again, as stronger-than-expected data including a jump in spending and big job gains allayed concerns about a recession and fueled expectations that the Fed would cut rates more slowly.
• In addition, traders have been piling into bets that both inflation and interest rates could stay high if Donald Trump takes the White House and his Republican party takes control of Congress in next week's close fought elections. U.S. 10-year Treasury yields, which mortgage rates track closely, hit a nearly four-month high on Tuesday.
• Refinancing applications slumped last week, the MBA said, and now account for just 43.1% of total mortgage applications. That's below the historic median of 48%.

(Source: Reuters)

• With revenues remaining largely flat, SVL reported earnings of $1.70Bn for the nine months ending September 2024, a 17.9% decline compared to the previous year. The results largely reflect a decline of 51.8% decline in earnings in the second quarter, which was due to a one-off lottery surplus that was recorded in the prior year.
• The company estimates that it lost $1Bn in gross ticket sales due to damages sustained from Hurricane Beryl to its retail networks in Clarendon, Manchester, St. Elizabeth, and Westmoreland during the quarter. As a result, it increased by just 0.8% over the nine-month period.
• That being said, overall costs were well contained, mitigating the impact of weaker revenues on the bottom line. Direct costs, which include payouts to horse racing and agents' commissions, rose by 1.4% during the period, totaling $30.03Bn. Selling and Administrative Expenses amounted to $6.07Bn, a 1.1% year-over-year increase.
• SVL’s stock price has been on a steady downtrend since the start of the year and has fallen by 19.8% year to date. However, the sharpest declines appeared to have occurred after the release of the weaker Q2 earnings in July (see Figure 1). The stock closed Monday’s trading session at $21.74, with a P/E ratio of 28.2x, higher than the Junior Main Market Entertainment Sector average of 21.7x.
• SVL's performance may face further challenges in the current quarter as the company’s distribution network is still not fully restored. This situation could impact lottery sales and, ultimately, its overall performance.
• However, innovation continues to be a cornerstone of SVL’s growth strategy as the company actively seeks to engage the public with exciting new games, leveraging its digital channels. By continually introducing fresh and dynamic offerings, SVL aims to enhance the gaming experience, drive business growth, and capture the interest of a wider audience. This commitment to innovation is essential for staying competitive in a rapidly evolving market and should help to bolster its performance over the medium term.

(Source: JSE & NCBCM Research)

• In a move to strengthen accessibility for Caribbean travelers, Jamaica has announced a new direct flight from Nassau, Bahamas, to Montego Bay’s Sangster International Airport (MBJ). Operated by Bahamasair, this service will start on November 17, 2024, with flights scheduled twice weekly on Thursdays and Sundays.
• Minister of Tourism, Hon. Edmund Bartlett, emphasised the significance of the new route, and highlighted that this new flight within the Caribbean region marks a significant step in strengthening regional connectivity and tourism.
• The announcement ceremony on October 24 at Kingston’s Courtleigh Hotel & Suites featured key tourism leaders from both nations. Donovan White, Director of Tourism for the Jamaica Tourist Board (JTB), highlighted the flight’s potential to enhance cultural exchanges and showcase Jamaica’s unique offerings.
• Peter Mullings, Deputy Director of Tourism, Marketing, JTB, added, “Tourism plays a huge role in both our economies, and this new route presents the opportunity for more visitor arrivals, cultural exchanges, and business opportunities.”
• The new Nassau-Montego Bay route marks a milestone in Caribbean tourism, connecting two popular destinations and creating enhanced opportunities for leisure and economic growth throughout the region.

(Source: Caribbean National Weekly)

• Price growth in Barbados is expected to average 2.1% in 2024 and 1.9% in 2025, down from 5.0% in 2023 projects Fitch Solutions.
• Barbados is heavily reliant on imports for both fuel and food and is therefore highly exposed to fluctuations in global commodity prices. As a result, the ongoing normalisation in global fuel and food prices following Russia's invasion of Ukraine in 2022, alongside the dissipation of secondary effects, informs this benign outlook for inflation in the coming quarters.
• Fitch’s Oil & Gas team projects that Brent crude oil prices will average USD78 barrel of crude oil (bbl) in 2025, down 3.7% from its 2024 forecast and 21.2% below the 2022 average of USD99.0/bbl. Meanwhile, its Agribusiness team expects that the emerging La Niña cycle will have a mixed impact on global agricultural food prices, pointing to a broadly neutral effect on domestic food inflation.
• Additionally, robust foreign reserve levels will support the Central Bank of Barbados' (CBB's) mandate to protect the currency peg, which will, in turn, neutralise exchange rate-driven imported price pressures.
• That said, risks to these inflation projections are to the upside. While global energy and food prices will remain broadly stable in 2025, escalating geopolitical tensions in the Middle East pose persistent upside risks to oil prices.

(Source: Fitch Solutions)

• With stronger-than-expected oil exports thus far this year, Fitch Solutions has raised its forecast for Guyana's current account surplus in 2024 from 26.5% of GDP to 30.4%. Further, it is expected that a ramping up of oil production over the coming years will sustain a wide current account surplus, averaging 28.1% of GDP over 2025-2028.
• Notably, Fitch’s Oil & Gas team's forecast that oil production will double from 595,000 barrels per day (b/d) in 2024 to 1,190,000b/d in 2028 as new offshore platforms come online will drive strong growth in oil exports over the coming years.
• That said, it is projected that Guyana’s financial account will swing into a deficit as oil companies recover costs, but robust foreign direct investment (FDI) inflows and rising international reserves should contain overall risks to Guyana’s external accounts.

(Source: Fitch Solutions)

• The nine days until Federal Reserve officials sit down to decide what to do next with interest rates features a veritable murderers' row of events to shape their move - everything from key employment and inflation data to a closely fought U.S. presidential election.
• However, it is not clear what among that mix might steer the U.S. central bank from what is seen widely as its most likely next decision - a second in a series of interest rate cuts aimed at keeping the U.S. labour market healthy and the economy out of recession as inflation cools.
• Importantly, rather than second-guessing their decision to ease policy, nearly all Fed officials who have spoken publicly since the Sept. 18 rate cut have said they are pleased with an unemployment rate at 4.1% and inflation that is now much closer to the central bank's 2% goal than before, and even the most hawkish among them have signaled support for further rate cuts to keep it that way.
• Updated projections published at the meeting last month show each of them believes there is at least a full percentage point of rate cuts to go before the policy rate gets to its longer-term "neutral" level. The Summary of Economic Projections (SEP) shows a majority believe there's at least two full percentage points of room for cuts.
• A first look at third-quarter economic growth is also on the docket, which is expected to come in at a strong 3% annual rate, and an updated estimate of how many job openings there are for every job seeker, a favorite labor-market metric for Fed Chair Jerome Powell, that has been showing gradual cooling.
• The U.S. government is also due to release the October jobs report, which is expected to show job growth slowed, though the underlying trend could be hard to parse since recent hurricanes and an ongoing strike at Boeing could reduce the month's payrolls by as much as 100,000 jobs and push up the jobless rate.

(Source: Reuters)

• The Bank of England (BoE) will cut its Bank Rate by a quarter-point on Nov. 7 to 4.75%, according to all 72 economists polled by Reuters, but a near-two-thirds majority expect no move in December, suggesting the BoE will stick to a cautious approach.
• British inflation plunged to a three-year low of 1.7% in September from 2.2%, below the BoE's 2% target. That leaves room for the Monetary Policy Committee (MPC) to cut rates next week after pausing in September, following a narrow vote to start easing in August.
• The British economy is still performing relatively well, with the prospect of an increase in investment from British finance minister Rachel Reeves' budget due this week. BoE Governor Andrew Bailey and MPC member Megan Greene welcomed the recent decline in inflation but downplayed its significance.
• Another MPC member, Catherine Mann, said the cooling of price growth has "a long way to go", suggesting a succession of cuts at each meeting may not yet be on the cards". Favourable inflation data in the interim between meetings has likely strengthened confidence among committee members that inflation is on a sustainable trajectory to target," said Ellie Henderson, an economist at Investec.
• Still, even if the BoE opts to cut twice more this year, it would still be moving slower than its peers. The U.S. Federal Reserve and the European Central Bank have cut interest rates by 50 and 75 basis points, respectively, and are both expected to have delivered a total of 100 basis points of cuts by year-end, compared with only 50 basis points from the BoE.
• Median forecasts showed the Bank Rate at 3.50% by the end of 2025, slightly lower than the September survey. Views ranged between 4.25% and 2.75%, with no majority.

(Source: Reuters)

• By the end of 2024, the Jamaican Dollar (JMD) will trade at JMD160.0/USD and weaken further to JMD164.0/USD by the end of 2025 according to projections from Fitch Solutions.
• In 2024, it projects that Jamaica will run a current account surplus of 2.0% of GDP (from 3.1% in 2023). While a current account surplus usually signals economic strength, this anticipated decline suggests that the external sector will likely act as a headwind to the JMD.
• Jamaica’s surplus is primarily supported by services exports, particularly tourism, and remittances (secondary income). However, Fitch anticipates that a slowdown in the US economy will limit both US residents’ appetite to send money abroad and tourism growth, negatively impacting these critical sources of foreign exchange.
• Looking ahead to 2025, the JMD is projected to face increased pressure as it is a managed crawl¹, so the FX will continue to depreciate gradually. The BoJ will strive to maintain JMD competitiveness given that inflation will be higher in Jamaica (averaging 4.0%) compared to the US (2.1%).
• The current account surplus is expected to narrow from 2.1% of GDP in 2024 to 1.9% in 2025, largely due to weakening external demand. In H1 2025, Fitch expects a reduction in tourism arrivals and remittance inflows, key sources of foreign exchange. However, a rebound in the US economy in H2 2025 should support these streams of FX inflows.
• Risks to this outlook include potential further depreciation of the JMD due to external factors such as fluctuations in global oil prices and heightened geopolitical tensions, which could drive up import costs and worsen Jamaica's trade balance. Additionally, capital outflows could reduce foreign exchange availability, further challenging the JMD's stability.

_________________________

¹A managed crawl currency strategy, often referred to as a crawling peg, is a type of exchange rate regime where a country’s currency is allowed to fluctuate within a specified range or band. The central bank periodically adjusts the exchange rate to reflect changes in economic conditions, such as inflation or balance of payments.

(Sources: Fitch Solutions)

• The International Monetary Fund (IMF), released its global fiscal report, highlighting the need for governments across the world to implement fiscal reforms, to reduce the economic risks to countries carrying high debt loads.
• The IMF’s October 2024 report entitled ‘Fiscal Monitor: Putting a Lid on Public Debt’ was driven from the same database used for the October 2024 World Economic Outlook and Global Financial Stability Report also referred to as “IMF staff projections.”
• The global report reinforced previous IMF recommendations for Antigua and Barbuda, warning that delays in implementing fiscal reforms could lead to increased economic risks. The report emphasised many of the same concerns about Antigua and Barbuda during its visit in June, particularly regarding debt management and revenue collection.
• “Public debt is very high, rising and risky,” said Vitor Gaspar, Director of the IMF’s Fiscal Affairs Department, announcing that global public debt is expected to exceed $100Tn this year. The IMF warns that delays in addressing fiscal challenges will make necessary adjustments more difficult in the future. This global warning comes just months after the IMF urged Antigua and Barbuda to address its fiscal challenges.
• In June, the Fund mission team noted that while the country’s debt-to-GDP ratio had improved to 76% in 2023, down from 100% during the pandemic, “cash constraints continue to bind, and domestic and external arrears are substantial.” The new report’s recommendations align closely with specific advice given to Antigua and Barbuda, including strengthening tax collection systems and broadening the tax base, better tracking of government spending and debt, and a focus on smart spending that helps the economy grow while getting debt under control.
• The good news, according to the IMF, is that now is a good time for countries to tackle these problems. With global inflation cooling down and many economies doing relatively well, countries have a better chance of fixing their finances without causing too much economic pain.
• For emerging markets and developing economies like Antigua and Barbuda, the IMF particularly emphasised the importance of upgrading tax systems and enhancing revenue administration capacity, making tax collection more efficient and fairer by protecting important government services while cutting unnecessary spending, and being more open about government finances so people know where their money is going.

(Source: Antigua Observer)

• Inflation in Brazil accelerated in the month to mid-October, as higher electricity costs pushed consumer prices up in Latin America's largest economy.
• Prices as measured by the IPCA-15 index rose 0.54% in the month to mid-October, up from 0.13% in the previous month, government statistics agency IBGE (Institute of Geography and Statistics) said on Thursday, October 25. Economists polled by Reuters were expecting a 0.50% rise. In the 12 months to mid-October, inflation stood at 4.47%, up from the 4.12% seen the month before and above the 4.43% forecast by economists.
• The main impact on inflation in the month to mid-October came from residential electricity prices, which rose 5.29%. Food prices also picked up, with a 0.87% increase on a monthly basis. This comes after electricity costs pushed inflation higher in September amid a major drought, reinforcing expectations of further interest rate hikes by the country's central bank.
• The monetary authority's rate-setting committee, known as Copom, kicked off an interest rate-hiking cycle last month with a 25-basis point increase and signalled more tightening ahead. "With comments from BCB (Banco Central do Brasil) policymakers warning about strong services inflation and unanchored inflation expectations, a step up in the pace of rate hikes from 25 bp to 50 bp is looking increasingly likely," said Kimberley Sperrfechter, emerging markets economist at Capital Economics.

(Source: Reuters)